News

Following Microsoft’s request that the U.S. Patent and Trademark Office reject Apple’s trademark application for the phrase “App Store,” TechFlash reports that Apple has filed a defense. The company has asked to dismiss Microsoft’s objection to the App Store trademark, pointing to Microsoft’s own long-time defense of its Windows trademark, and stating that Microsoft should be “well aware” that a mark’s genericness depends on the “primary significance of the term to a substantial majority of the relevant public.”

Apple’s filing goes on to cite testimony from linguistics expert Robert Leonard, who contends that “the predominant usage of the term APP STORE is as a proper noun to refer to Apple’s online application marketplace,” and that mobile application developers and platforms have reasonable alternative names available to them, such as Microsoft’s use of the term Marketplace to refer to its own Windows Mobile applications store. In its previous filing, Microsoft argued that Apple itself has used the term generically, and that Apple’s use of the term for its online iOS and Mac applications store is a “de facto secondary meaning” of a generic term. The case is now under review by the USPTO Trademark Trial and Appeal Board, which may choose to deny Apple’s application based on Microsoft’s assertions, or allow the application process to proceed.

Paul Devine, a former global supply manager with Apple, has pleaded guilty to multiple charges stemming from a scheme that involved Devine receiving kickbacks from Asian suppliers in exchange for confidential information. Reuters reports that Devine pleaded guilty to wire fraud, conspiracy and money laundering in a San Jose federal court, and also agreed to give up around $2.28 million in money and property. “Mr. Devine is a good man who made a mistake, and now he’s trying to make amends,” said his attorney Raphael Goldman. Devine faces a maximum prison term of 20 years on the wire fraud and money laundering counts, but could receive far less time; sentencing is scheduled for June 6.

Several applications designed to facilitate music piracy have unexpectedly been approved by Apple, and are currently available on the App Store. Music Forest (Free) and Music Forest Full ($1) from You Jinwen and Music Downloader ($1) from Chen Lunyu allow the user to search online databases of music or browse music charts—including the U.S. Billboard Top 100—then tap to download songs directly to the device. Music Forest automatically grabs song lyrics from the Internet; and also offers AirPlay streaming support. Interestingly, the apps offer users of jailbroken devices the ability to transfer downloaded files to a computer using a desktop file browsing application such as iPhone Explorer for the Mac.

Several other applications, such as Downloads - Download Manager ($2) by Hian Zin Jong, are now using modified browsers to support the downloading of all sorts of files, including music files and movies. Though a number of browser-based downloading applications have been offered for legitimate purposes, this one uses screenshots to show the illegal downloading of the entire Tron Legacy film soundtrack in its App Store screenshots, and allows direct importation into iTunes using Apple’s USB File Sharing feature. Additional screenshots and comments for the app explain that it can be used to download pornography and access well-known sources of pirated media files. Based on past experiences with applications of this sort, it is likely that Apple did not properly screen these apps before approving them, and will pull them from the App Store in the near future.

Apple has clarified its plans for using cloud-based remote music storage, according to a new report. Citing several music industry executives, the Financial Times reports that Apple is now planning to use its cloud storage to allow iTunes Store users to back up their music collections and access them from any Apple device. According to one person with knowledge of the company’s plans, Apple doesn’t want to undermine the market it currently dominates for digital music downloads, instead likening its plan to “insurance.” Although no launch date for the service is mentioned in the report, it is noted that Apple’s offering will face competition from a similar service from Google, and from music streaming service Spotify, which is said to be nearing a deal with Universal Music that would give it the support of three of the “big four” record labels and could ultimately lead to a U.S. launch this summer.

Apple has notified resellers that it has discontinued the retail box version of MobileMe, shifting completely to online sales, according to a Mac Rumors report. Existing stock of the boxed version of MobileMe can continue to be sold while supplies last, the report states. The boxed version of MobileMe contained little more than an activation code and promotional materials, and therefore served primarily as a way to provide in-store visibility for the offering. Apple is said to be working on a revamp of the online service suite, and is considering making it a free service to serve as an online “locker” for personal data such as photos, music, and videos. As noted in the report, Apple executives confirmed during yesterday’s annual shareholders meeting that the company’s new data center in North Carolina should be opening soon and will primarily support its MobileMe and iTunes services.

Apple has posted a new support document outlining the purchase and management of In-App Subscriptions. Entitled “Purchasing and managing auto-renewing subscriptions,” the document contains instructions for managing the subscriptions from the Account section of the App Store and turning off the automatic renewal of subscriptions. It also describes the process of opting out of special mailings and offers from the publisher. It states, “During your purchase, you may be asked to allow or disallow the publisher to have access to your name, email, and zip code for special mailings and offers from the publisher. Simply tap Allow or Don’t Allow; neither choice will affect the terms of your subscription. If you choose to allow the publisher access to your name, email, and zip code, your information will be treated in accordance with the Licensor’s privacy policy.” Apple is expected to enable its subscription service upon release of iOS 4.3; the software is rumored to have hit Gold Master status and could be released as early as next week’s Apple media event.

Apple today held its 2011 annual shareholders meeting at its campus in Cupertino, CA. Among the items up for vote was a shareholder proposal, backed by Institutional Shareholder Services (ISS) and the Laborers’ International Union of North America, that would require the company’s board of directors and CEO to annually update and disclose a CEO succession plan. The proposal was opposed by Apple, and was today voted down by shareholders. Another shareholder proposal opposed by Apple, changing the election process of the board from a plurality vote to a majority vote, passed, however; the shareholders also re-elected all seven board members. Notably, Apple CEO Steve Jobs, who took a medical leave of absence earlier this year, did not attend the meeting.

As expected, Apple has sent out invitations to select members of the media inviting them to a special event on March 2. The image accompanying the invitation features a mockup of iOS’s Calendar app set for the date of March 2, with a corner peeled back to reveal an image of the original iPad underneath, and the tagline “Come see what 2011 will be the year of.” Apple is expected to unveil the second-generation iPad at the event; the device itself is expected to feature a front-facing camera for FaceTime video calling, a larger speaker, and a thinner design, among other improvements. The event will be held at the Yerba Buena Center for the Arts Theater in San Francisco and will start at 10:00 a.m. Pacific Time.

Apple has cut the minimum buy for its iAd mobile advertising platform in half, according to a new report. AllThingsD reports that Apple has reduced the entry cost from $1 million to $500,000, in order to appeal to smaller-scale advertisers that couldn’t afford to initial entry cost. “This new minimum buy is a great step forward and a necessary one, I think,” said Mark Read, CEO of WPP Digital, the digital arm of global ad firm WPP. “Lowering the minimum buy to $500,000 from $1 million will certainly make the platform more appealing.” Despite claims of more than 60 successful brand campaigns by Apple, the report notes that some developers saw their fill rates—the percentage of ad inventory actually filled with an ad—decline in the early part of 2011; the lower minimum ad buy is likely meant to reverse than trend and bring more brands into the fold. “Apple isn’t necessarily targeting television ad budgets with iAds, but brand budgets,” said Read. “It’s after whatever portion of the Net advertising budget that it can get by offering access to this developing mobile demographic, which is a pretty valuable one.”

Apple plans to debut its version of Intel’s Light Peak technology, dubbed Thunderbolt, as well as a newly renamed “FaceTime HD” camera on its new MacBook Pros, which it is expected to announce tomorrow. Mac Rumors reports that the details have come from both leaked images of the new laptops and their packaging. Light Peak is a proprietary high-speed I/O interface developed by Intel that is meant to serve as a single universal replacement for current input/output buses such as FireWire, USB, SATA, and PCI Express. Intel is holding a media event tomorrow at which it is expected to discuss the technology, however, past releases have pegged its initial bandwidth limit at 10 Gbit/s. If or when Apple plans to add Light Peak-compatible ports to its portable media devices is currently unknown.

In addition to the Thunderbolt technology, the new laptops’ labels also boast of a “Built-in FaceTime HD camera.” While the fine print related to the claim notes that FaceTime video calling requires a FaceTime-enabled device and a Wi-Fi connection for both caller and recipient, the “HD” moniker is curious in that it suggests Apple may be planning to offer higher-resolution, possibly as high as 720p, video chats between Macs and any other products it makes that are capable of processing the video, displaying the video, and capturing the video at a high enough resolution. While the front-facing cameras of the iPhone 4 and fourth-generation iPod touch are too low a resolution to be considered “HD,” both of the devices’ rear-facing cameras can capture 720p video.

Update: Apple has released version 1.0 of FaceTime for Mac on the Mac App Store for $1, bringing with it support for 720p “FaceTime HD” video calling. Notably, the HD feature is currently restricted to the company’s new line of MacBook Pro computers which were officially released this morning; past hardware, including Mac, iPhone 4, and fourth-generation iPod touch units, is currently not supported despite its capability to capture HD video content.

A group of workers from Wintek, an Apple manufacturing partner, suffering from symptoms related to n-hexane exposure has written a letter to Apple asking it to address their concerns. Reuters reports that the letter, signed by five employees claiming to represent their workmates, said the workers are suffering from numbness in their hands and feet, weakness in their limbs, and difficulty resting at night. In its 2011 Apple Supplier Responsibility report (PDF Link), Apple admitted that 137 workers at the Suzhou facility of Wintek suffered adverse health effects following n-hexane exposure, something they considered a “core violation for worker endangerment.” Apple claims to have required Wintek to stop use of the chemical, provide evidence of compliance, and to have required them to fix their ventilation system; the company also states that “all affected workers have been treated successfully.”

Despite receiving treatment, the workers claim that Wintek has not provided ample compensation to affected employees, has pressured those who took compensation to abandon their jobs, and has not provided affected workers any assurances that future medical costs related to the exposure will be covered. Lam Ching-wan, a chemical pathologist at the University of Hong Kong, said that daily exposure to n-hexane can cause long-term and possibly irreversible nerve damage. “We are unable to cope with the medical costs of treatment in the future,” said Guo Ruiqiang, a worker at the Wintek plant, who said he was suffering fresh symptoms he believes are residual effects of the poisoning. “We can only stay in the factory and see what happens. We just feel very helpless now.”

Apple is scheduled to hold a special media event on March 2 in San Francisco, at which it will unveil the second-generation iPad. Citing several sources close to the situation, AllThingsD reports that the date is firm, and that the Yerba Buena Center for the Arts is the likely venue; notably, it served as the venue for Apple’s original iPad media event, as well. Apple has yet to send out invitations to media members officially confirming the event and the time/place, but given the close proximity of March 2, it will likely do so later this week.

Apple is among a group of digital music retailers in discussions with record labels to improve the sound quality of their digital offerings, according to a new report. Citing executives involved in the talks, CNN reports that the change would involve the labels supplying retailers with 24-bit audio files, as opposed to the 16-bit files that are currently distributed. “We’ve gone back now at Universal, and we’re changing our pipes to 24 bit. And Apple has been great,” said Interscope co-founder and chairman Jimmy Iovine. “We’re working with them and other digital services—download services—to change to 24 bit. And some of their electronic devices are going to be changed as well. So we have a long road ahead of us.” According to the report, the higher-quality files might be sold at a premium price, and could require upgrades to future iPods and iPhones to ensure compatibility. “Paul McCartney can master The Beatles albums all he wants,” said Iovine, who also works with Dr. Dre on Beats Audio products, “(but) when you play them through a Dell computer, it sounds like you’re playing them through a portable television.”

Both the Justice Department and the Federal Trade Commission have started looking at the new terms Apple set this week for media companies that want to sell content on the iOS platform, according to a new report. Citing people familiar with the matter, the Wall Street Journal reports that the groups’ interest in Apple is only at a preliminary stage, and won’t necessarily develop into a formal investigation or action against the company. Beyond the U.S., a spokesperson for the European Commission has said the commission is aware of Apple’s new policies and is “carefully monitoring the situation.” Earlier this week, Apple issued a press release announcing its new subscription service for the App Store, in which it revealed new rules that forbid companies from including links in their apps to sell content outside the app, force them to offer the same subscription price via In-App Purchase—of which Apple gets a 30 percent cut—as they do outside the app. Banning apps from linking to external sites “sounds like a pretty aggressive position,” said Eric Goldman, director of Santa Clara University’s High Tech Law Institute. “It seems like that’s purely in the interests of Apple trying to restrict people doing transactions they don’t get a cut from.”

Apple has secured close to 60 percent of global touch panel capacity for 2011, leading to tight supplies for its competitors, according to a new report. Citing sources from upstream component makers, DigiTimes reports that Apple’s move was made in order to achieve its internal goal of shipping 40 million iPads in 2011, with the company holding control over the capacity of major panel suppliers such as Wintek and TPK. Sources from iPad distributors reportedly said that Apple’s 2010 order forecasts to OEM partners were also high, but the biggest problem on the supply side was not capacity, but instead low yields of touch panels. The report notes that aside from Apple, large companies such as Motorola, RIM, and HP are also competing for related components, leaving second-tier tablet makers “out of the game.”

While the majority of yesterday’s Apple App Store subscription press release focused on the company’s new subscription purchasing system for periodicals, the company also snuck in a policy change that could impact important non-periodical apps. Coupled with an existing policy that gives Apple a 30% share of in-app purchases, the new policy forbids publishers from providing links in their apps to sell content outside the app, where Apple receives no revenue.

This language echoed an earlier statement from Apple spokesperson Trudy Miller, who in responding to the unexpected rejection of Sony’s reader application said, “We are now requiring that if an app offers customers the ability to purchase books outside of the app, that the same option is also available to customers from within the app with in-app purchase.” While that policy appears from one perspective to be reasonable, the practical consequence is that companies are now faced with the business choice of raising their prices across the board as a way to recoup revenues lost to Apple, or cutting off support for Apple’s products and users. Under one scenario, both the company’s Apple- and non-Apple customers will pay more for their content; under the other, customers will pay the same prices but be unable to use the content on Apple’s devices.

The ramifications for traditional publishers, such as the New York Times and Time, Inc., are still being sorted out. “We have agreements with other other tablet makers on mutually beneficial business terms,” a spokesman for Time Inc. told the Wall Street Journal. “Apple’s latest announcement seems to be a step in the right direction, but it raises a lot of questions, mostly centered around consumer data, that we have to work through and agree on.” The New York Times, which has been preparing its own billing system to allow it to sell a digital subscription that includes both online and app access, said through a spokesperson that “We are working with Apple to understand how this impacts our plans, if at all.” Other companies that have not traditionally been understood as publishers, such as digital book vendors Amazon and Barnes & Noble, are being treated as publishers by the new policy and subjected to the same content-related fees and rules. iLounge reached out to both Amazon and Barnes & Noble for comment on how the policy changes might affect their e-reader apps for iOS, but had not received a response from either at the time of this article’s publication.

The impact of the change on other companies—such as those that provide subscription-based access to streaming media, like Netflix, Hulu, and Rhapsody—is even less clear. Rhapsody has already issued a statement airing its concerns over the changes, which states, “Our philosophy is simple too – an Apple-imposed arrangement that requires us to pay 30 percent of our revenue to Apple, in addition to content fees that we pay to the music labels, publishers and artists, is economically untenable. The bottom line is we would not be able to offer our service through the iTunes store if subjected to Apple’s 30 percent monthly fee vs. a typical 2.5 percent credit card fee.” The statement added that “we will be collaborating with our market peers in determining an appropriate legal and business response to this latest development.”

As a consequence of the change, Apple will likely face antitrust scrutiny over its new policy, although it remains to be seen whether its position in the market is seen as strong enough to force action, and to establish Apple’s position in the market, the market itself must be defined. While publishers might claim that Apple dominates the market for consumer tablets, and is using its position to restrict competition, Apple might define the market as including all digital and print media, suggesting that any publisher unhappy with Apple’s terms is still free to reach customers through other means. “Millions will be spent litigating how broad the market is,” Herbert Hovenkamp, an antitrust professor at the University of Iowa College of Law, told the Wall Street Journal. He also said that digital media is the most plausible market definition in this case, and that he doubts Apple currently has a sufficiently dominant position to warrant scrutiny. Should Apple reach a point where it is selling 60 percent or more of all digital subscriptions through the App Store, according to Hovenkamp, “then you might move into territory where an antitrust challenge would seem feasible.”

Apple has posted a support document outlining the differences in calling features between the GSM and CDMA models of iPhone. As the document notes, “depending on your wireless carrier’s network technology (GSM or CDMA), there are different methods for enabling and using” many phone features. The list of features includes call forwarding, call waiting, caller ID, conference calls, inserting pauses when dialing, and hold. Notably, the GSM model of iPhone supports up to five calls simultaneously in conference call mode, while the CDMA model supports only two, and doesn’t offer support for placing a call on hold, while the GSM model does. [via 9 to 5 Mac]

Following this morning’s announcement of a new subscription billing service for the App Store, Apple has updated its App Store Review Guidelines to reflect changes related to the subscription service, as well as to add new language relating to those who try to ‘cheat’ the App Store system. As reported by Mac Rumors, the new guidelines state, “If you attempt to cheat the system (for example, by trying to trick the review process, steal data from users, copy another developer’s work, or manipulate the ratings) your apps will be removed from the store and you will be expelled from the developer program.” The report notes that the language was likely added to give Apple further power to deal with developers who hide unauthorized features as “easter eggs” inside their programs, as well as those who steal content from other developers.

Apple today announced the launch of its long-rumored subscription service for the App Store. According to the announcement, the service is available to all publishers of content-based apps on the store, including magazines, newspapers, video, music, and more. The service will use the same App Store billing system as In-App Purchases, and will allow publishers to set the price and length of subscription (weekly, monthly, bi-monthly, quarterly, bi-yearly or yearly). Customers are able to choose their subscription length with one-click, are automatically charged based based on their chosen length of commitment, and will be able to review and manage all of their subscriptions from their personal account page, including canceling automatic renewals. Notably, Apple processes the payments, and keeps the same 30 percent share as it does for other In-App Purchases.

Customers who purchase a subscription through the App Store will be given the option of providing personal information—such as their name, email address, and zip code—to the publisher when they subscribe. The use of such information will fall under the publisher’s privacy policy, rather than Apple’s. The same rules will apply for any additional information provided to the publisher via the app, assuming the customers are offered a clear choice as to whether or not they want to provide the information, and are clearly told that any additional information will be handled under the publisher’s privacy policy and not Apple’s.

“Our philosophy is simple—when Apple brings a new subscriber to the app, Apple earns a 30 percent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing,” said Apple CEO Steve Jobs. “All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app, so that customers can easily subscribe with one-click right in the app. We believe that this innovative subscription service will provide publishers with a brand new opportunity to expand digital access to their content onto the iPad, iPod touch and iPhone, delighting both new and existing subscribers.”

The announcement goes on to say that publishers offering Apple’s subscription service from inside the app may also leverage other methods of acquiring digital subscribers outside of the app, such as selling digital subscriptions online, or providing free access to existing subscribers. Apple notes that there is no revenue sharing or exchange of customer information in such cases, and that it will be up to the publisher to provide an authentication process for such subscribers. In addition, publishers may no longer provide links in their apps which allow the customer to purchase content or subscriptions outside of the app.

A new report claims that Apple and Samsung are negotiating a component contract that would see the iPhone maker purchase $7.8 billion in parts from Samsung this year. Citing industry sources, the Korea Economic Daily, via the Wall Street Journal, reports that the massive contract would include LCD displays, mobile application processors, and NAND flash memory chips used in the iPod, iPhone, and iPad. The report notes that should the contract push through, Apple would become Samsung’s largest customer.